Renting a Home With Bad Credit: a Guide to Success

May 4, 2022
Property Rental Myths in Adelaide

Landlords are always looking out for their property. After all, they have sunk thousands of dollars to acquire the property. They ensure that they comply with state law and that the property is well maintained. Another critical element for successful rental property ownership is the tenant.

Landlords implement tenant screening to select the best renter possible. Part of the screening process involves a credit check on the prospective renter. The property owner will be in the market for a renter with a good credit history. This means a good credit score and no black marks.

Is renting impossible if you have a bad credit history? This article gives you tried and tested options to go around the matter.

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Consider a share house

Very few landlords want to risk their property investment on a recent graduate from university. In most cases, graduates are starting their careers. In addition, one might have outstanding student loans bearing down on them.

We recommend that you consider a share house. Two or more renters live in the same dwelling unit in such a rental space. While each may have their private room, they will share the other shared areas.

You will eventually want your apartment or unit. But to get there, you need to prove that you are a quality tenant and can adhere to the lease terms. Remember to sign the agreement as a co-tenant of the space.

Look for a roommate

renting with bad credit

If you’re renting a home with bad credit and your name is on the lease, the risk of rejection are probably higher.

A more long-term solution is to get a roommate with an excellent rental history. Landlords would not think twice if one roommate had a stellar reputation as a renter. Their reputation will sway the landlord, convincing them that you are less risky.

After months of renting the space together, ask to be added to the lease agreement. There should be no issue provided you have met the terms of the lease during the period.

Use your savings

Landlords perceive a bad credit history as a lack of financial muscle. It could be that you made some bad choices along the way. And now you are on the mend. You can alleviate their worry by choosing to pay in advance.

Tenants typically pay one month’s worth of rent in advance. Consider paying two months in advance to create an excellent first impression.

renting with bad credit

Character references

Don’t underestimate the power of a good reference when you’re renting a home with bad credit history. It could be the difference between renting the space of your dreams and continuing to search the market.

The best references come from reputable and trustworthy figures in the community. This could be a professor from the college, a community leader, or your employer. Attaching such a reference to your rental application is a testament to your character. 

Please note. A well-detailed reference from a relative doesn’t count. A landlord can interpret this as a biased recommendation. It might not be a true reflection of your character or personality.

Get somebody to vouch for you

renting with bad credit

This section is where a family member or relative comes in. A guarantor is standard for young tenants moving into their first home. A parent or guardian will co-sign the lease. This makes them liable.

A landlord seeks to have their property rented out and paid for. If you can guarantee that a landlord may agree to such terms even by using a sponsor.

Find a less popular location

The more competitive an area is, the stricter the screening process will be. This applies to the downtown area, gated communities, and the suburbs. Getting a rental property here will require you have a stellar reputation.

Consider lowering your expectations slightly to improve your chances of securing an apartment unit to rent.

Offer to pay more

renting with bad credit

With a bad credit history, landlords look at your rental application and foresee an increase in risk. Why don’t you compensate them for that increased risk with more rent? Offer to pay them 3 to 5 percent more of the rental asking price.

We recommend this as a last resort, appreciating that you don’t have unlimited funds. It would be unrealistic to say that you can continue more than the market rent for perpetuity. Agree with the landlord to pay for several months to assess your character or personality.

Pay up those loans

For most people renting a home with bad credit history, the poor credit history is due to late payment of bills and possibly defaulting on loans. If you have landed an excellent job, start saving up. Pay up those loans and square things with your lender in the shortest time possible.

We must warn you of malicious lenders in the market. They might offer you loans with high-interest payments to pay off your previous ‘loans’. This move might come to haunt you later in the future.

Show proof of income

As mentioned earlier, you might have been the bearer of bad luck in the past. A con artist might have manipulated you leading to your current situation. A reasonable landlord can hear you out, provided that you have information to back that up.

Ask for a letter of recommendation from your employee. Approach the bank and request a bank statement. Proof of income and stable employment may sway the landlord in your favour. You can show the landlord how reliable you are as a future tenant. 

Do you know what‘s in the credit report?

renting with bad credit

Before you begin your renting journey, access your credit report history. Check whether there are any errors or inaccuracies. There could be damaging information that would hamper you from renting your dream apartment.

Need more financial advice? 

Browse our finance category. It’s chock full of hacks and advice from industry professionals. And remember to download the Soho app for quicker browsing and property matching. It’s getting you into your dream home faster!

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